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GUEST BLOG: Creating an effective process for Returns in omnichannel retail

BY Gregory Davis

With the major selling holidays now behind us, retailers are preparing to handle the onslaught of returns that began on Dec. 26 and continue well into the first few weeks of the New Year.
   
In fact, according to the National Retail Federation’s “2014 Consumer Returns in the Retail Industry,” the amount of holiday merchandise returned to stores last year amounted to $68.9 billion.

For omnichannel retailers, the returns process can be a make-it-or-break-it -moment in terms of creating a lasting customer experience memory with their consumers. Because customer loyalty is the product of all engagements with a retail brand, a smooth and customer-centered returns process is a critical part of the omnichannel shopping experience. To fully prepare a retail organization for the heavy traffic of expected returns that will happen both online and in-store, it’s important to take a behind-the-scenes look at the processes that help drive a smooth return.

In the digital world that we now live in, today’s consumers require the ability to purchase items online and return those items at the physical store if needed.

The returns process should be seamless and responsive to all channels while also guaranteeing consumer’s privacy and information safety, diminishing the possibilities of credit card fraud as much as possible.

Retail industry veterans will probably remember how older point of sale (POS) systems would mask credit card information — a setup that was significantly easier for fraudsters to take advantage of and one that led to restrictive return policies that often created ill will with customers. However, with the tokenized approach outlined below, the POS doesn’t hold any credit card data. As a result, retailers can offer more flexible, shopper-friendly return policies without jeopardizing the shopper’s card data.

The Players
With a few additions, the same systems and entities are involved in the returns process as in the payment process:

• The POS system: The POS is responsible for scanning the receipt for the return transaction and the eligible items. It also communicates with the enterprise transaction database and returns management system to verify the return.

The PIN entry device (PED, a.k.a., the PIN pad): As with a purchase, the PED accepts and encrypts the data for the card used in the original transaction.

The enterprise transaction database: This back office retail system maintains a rolling record of recent transactions associated with the token generated during the original purchase.

The returns management system: This system logs all returns activity against the original transaction.

The electronic payment server (EPS): During the returns process, the EPS accepts the encrypted data from the card swipe and communicates with the payment gateway.

The payment gateway: This application typically runs at a central enterprise location. Its role is to interact with the EPS to take the card swipe and generate a numerical token used as a card’s identifier during the return. It can also house a token vault where the token from the original transaction is stored.

The acquiring bank: This is the bank or financial institution that processes the original payment on behalf of the retailer and credits the shopper’s account with a valid return.

The Returns Process
While the return transaction between an associate and a customer can take just two minutes to complete, the process is more complex than just pressing a few buttons.

When a shopper hands an associate the card used for the initial transaction, the associate should proceed to swipe the card through the PED. The PED will then encrypt the card information and forwards it to the EPS. The EPS contacts the payment gateway’s token vault, and the token vault generates a token based on the card information (and matching the token from the original transaction) and sends the token back to the POS.

The POS takes the token and searches the enterprise transaction database for a transaction associated with that same token. The enterprise transaction database returns all matching transaction information to the POS (multiple transactions may match).

The associate selects the item to be returned from the matching transactions and scans the returned item. The POS connects with the returns management system to ensure the item is linked to one of the transactions, and returns management sends a confirmation to the POS.

Following the confirmation, the associate swipes the credit card at the PED, the encrypted information goes to the EPS, the token vault at the payment gateway generates a new token for the return, and the token goes to the acquiring bank to have them apply the credit to the shopper’s account.

The token for the return is also forwarded to the POS to keep a record of the return and to transmit the transaction data to the ERP system.

Understanding the returns process can be a critical step in maximizing the omnichannel customer experience. For retailers, the returns process is more than an afterthought. As more customers buy online and return items to the store, it can be a clear differentiator in the shopping experience.

A safe, secure returns transaction is a small but significant part of building the good will that will drive repeat visits and future purchases.



Gregory Davis is VP of product strategy at Starmount. He can be contacted at gdavis@starmount.com.

 

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Oct-01-2016 04:47 am

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Holiday sales far from ‘ho-ho-hum’ for Amazon sellers

BY Dan Berthiaume

Some of the details are vague, but businesses and individuals selling items via Amazon.com experienced a generally successful holiday season.
 
According to figures released by Amazon, more than 23 million items were ordered worldwide from sellers on Amazon on Cyber Monday, a more than 40% increase year-over-year. Use of the Amazon Sponsored Products targeted advertising service by sellers grew more than 100%year-over-year worldwide. Clicks on Sponsored Products in the U.S. grew by more than 200% from the previous holiday season.
 
In addition, during the holiday season, individuals and businesses selling on Amazon sold to more than 80% of Amazon customers worldwide who ordered a physical item. The number of third-party seller items shipped via the Fulfillment by Amazon (FBA) hosted fulfillment system grew by more than 60% worldwide during the holidays.
 
Amazon also released some data about third-party sales performance during 2015:
 
• FBA delivered more than 1 billion items to customers worldwide.
• Active sellers worldwide using the FBA service grew more than 50% year-over-year.
• Using the FBA service, Amazon sellers from more than 100 different countries around the world fulfilled orders to customers in 185 countries.
• Cross-border sellers worldwide using FBA grew more than 100% year-over-year.
• In 2015, sellers worldwide using Sponsored Products grew more than 100%.
• Sellers worldwide garnered more than $1.5 billion in sales through Sponsored Products listings.
 
“2015 was a big year for sellers on Amazon,” said Peter Farcy, VP Amazon Marketplace. “In fact, sellers added more new selection and shipped more items than in any previous year. We’re excited to build on that momentum as we continue to innovate on behalf of sellers and customers.”

These results are impressive, but are reminiscent of similarly vague statistics Amazon recently issued about Amazon Prime’s holiday performance. Amazon is a notoriously secretive company, but if it really wants to impress the industry with its success, it should consider releasing at least a few more specific numbers from its year-end performance.

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E-commerce shopping activity reaches new heights on New Year’s Day

BY Dan Berthiaume

All was not quiet on New Year’s Day for online retailers and their customers.
 
According to Verizon Retail Index data, broadband traffic attributed to e-commerce shopping activity reached new heights over the New Year’s holiday weekend (Jan. 1-3). E-commerce traffic posted highs of 28%, 32% and 36% respectively above average daily levels on those three days – a similar pattern to the prior year. Notably, Sunday posted the highest activity of the season to date which is consistent with a trend identified by Verizon during the 2014 season.
 
However, mobile traffic attributed to m-commerce was lower (98%, 99% and 97% of normal levels) than usual over the holiday weekend. Year-over-year, overall traffic was higher during the same period in 2014.
 
 “As expected, retailers rang in the new year with a bang as they rallied to the finish line to move merchandise including excess winter inventory,” said Michele Dupré, group VP of retail, hospitality and distribution for Verizon Enterprise Solutions. “Retailers enticed consumers with time-bound promotions to create a sense of urgency and consumers with extra time on their hands due to the long holiday weekend appeared to respond in droves.”

Dupré believes these findings indicate there is still time to capture wallet share through Saturday, Jan. 9 as the season begins to wind down. In addition, mobile engagement will be key as many consumers return to work.

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